Creating Financing Strategies for Infill Development

[Timothy Fortin]

Hey folks - I’m interested to hear how others have gotten past funding bottlenecks for new construction projects. 

I’ve had success with infill development, exiting through a sale at the end, but have reached a bottleneck in how many concurrent projects I can fund. 

My current strategy is to fund the projects with 85% LTC construction loans and cover the other 15% either with my own cash or tapping into a HELOC.

I know one option is to wade into the waters of private funding. What are some other ways to fund the 15% gap?

Look forward to hearing from y’all.

[Stuart Udis]

@Timothy Fortin Fully entitled well located land with a compelling investment thesis is the cure-all. If you have that, you can attract equity albeit smaller projects can be difficult and you will be reliant on friends and family relationship. Partnering with well capitalized builders will help as well because they can maneuver through a job without solely being reliant on your draws. Last piece of advice is to raise additional capital because shortages while building ground up can be a painful proposition. Next thing you know your entire pipeline is stalled because of one underfunded project so make sure you raise enough equity. Most get in trouble by under raising while trying to negotiate better ownership splits for themselves due to the lower equity raise. Don’t make that mistake. Better to own a smaller percentage of projects that perform well than own greater percentages of projects that perform poorly with added stress.